Also known as the point of intersection between a supply curve and a demand curve. This is also know as the market clearing price. As the name equilibrium implies, it is the point when the supply equals the demand. Past this point, is a disequilibrium point, where the demand is not equal to the supply. Due to the nature of economics, it is typically dictated that any time that the price is at an disequilibrium point, it will try to counteract itself to go back to this ideal point, where both the customer and the supplier are satisfied. Also, it will stay at this point until the factors affect it (such as cost, income, advertising, etc) change and change its values to be offset.

The effects that affect this equilibrium point and the shifts in the demand curve and/or supply curve fall are known as the laws of supply and demand.

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